There is an increasing number of robo-advisors in Canada. Most of the products are offered by newer names you might not be familiar with.
Many investors want to enjoy the benefits of smart and automated investing with robo-advisors. The problem is the lack of backing from reputable institutions.
In my RBC InvestEase review, I will discuss a new robo-advisor product that one of the country’s oldest financial institutions launched.
I hope my RBC InvestEase covers everything you need to know to decide whether you want to work with one of the latest robo-advisors in the market.
For a big bank robo-advisor it’s not a bad choice. However it still falls short of the top robo-advisors in Canada.
- Backed by a reputable financial institution
- Access to accredited Portfolio Advisors
- RBC covers transfer fees up to $200
- Competitive fees for portfolios under $100,000
- No tiered fee discount for larger accounts.
- No mobile app
- Limited account and portfolio options
- No financial planning options
What is RBC InvestEase?
RBC InvestEase is the robo-advisor platform made by the Royal Bank of Canada. Launched late in 2018, RBC InvestEase brings investors the benefits of low-cost digital investing services like other robo-advisors, but with a backing of a well-known financial institution.
Unlike most robo-advisors, RBC InvestEase’s robo-advisory services are not purely about technology. Employing a dedicated team of accredited portfolio advisors, RBC InvestEase, helps you invest your money. The team is available to answer questions you may have regarding your portfolio, making RBC InvestEase a type of hybrid robo-advisor.
Features and Benefits of RBC InvestEase
In this section of my RBC InvestEase review, I will discuss the main features and benefits that should tell you what to expect if you use this robo-advisor product.
Accounts Offered by RBC InvestEase
RBC InvestEase is a relatively new robo-advisor product. Currently, the robo-advisor does not offer too many account types that you can use. At writing, the robo-advisor offers three different account types, including:
- Tax-Free Savings Account (TFSA)
- Registered Retirement Savings Plan (RRSP)
- Non-registered investment account
The options seem somewhat limited if you compare them to most robo-advisors in the market, but RBC InvestEase plans to expand on this later on.
Portfolios Offered by RBC InvestEase
When you open an account with RBC InvestEase, it gives you a small questionnaire about your age, investment timeline, how much you would like to invest, and other relevant questions. The robo-advisor uses your responses to the questionnaire to determine your risk tolerance and understand the financial goals you have with your investments.
Based on your responses, RBC InvestEase recommends an investment plan based on your answers.
RBC InvestEase offers five basic types of portfolios that range from conservative to aggressive growth portfolios. It crafts carefully selected portfolios of ETFs (Exchange-Traded Funds) to reflect your risk tolerance and goals in its recommendation.
Each portfolio is made with low-cost ETFs that can include:
- iShares Core Canadian Short Term Bond Index ETF (XSB) – MER 0.10%
- iShares Core Canadian Universe Bond Index ETF (XBB) – MER 0.10%
- iShares Global Government Bond Index ETF (CAD – Hedged) (XGGB) – MER 0.40%
- iShares Core S&P/TSX Capped Composite Index ETF (XIC) – MER 0.06%
- iShares Core S&P 500 Index ETF (XUS) – MER 0.11%
- iShares Core MSCI EAFE IMI Index ETF (XEF) – MER 0.22%
- iShares Core MSCI Emerging Markets IMI Index ETF (XEC) – MER 0.26%
RBC InvestEase Responsible Investing Portfolios
RBC InvestEase also offers responsible investing portfolios that you can use if you want to invest in companies with a high environmental, social, and governance rating. The responsible investing portfolios exclude companies involved with controversial businesses like tobacco, manufacturing weapons, or firearms.
Its responsible investing portfolios can include the following ETFs:
- iShares ESG Canadian Short Term Bond Index ETF (XSTB) – MER 0.20%
- iShares ESG Canadian Aggregate Bond Index ETF (XSAB) – MER 0.20%
- iShares ESG MSCI Canada Index ETF (XESG) – MER 0.23%
- iShares ESG MSCI USA index ETF (XSUS) – MER 0.28%
- iShares ESG MSCI EAFE Index ETF (XSEA) – MER 0.34%
- iShares ESG MSCI Emerging Markets Index ETF (XSEM) – MER 0.36%
RBC InvestEase constructs each client portfolio based on the client’s goals, time horizon, risk tolerance, and investing experience. While the two options may seem limited, there can be various combinations and weightings depending on each client.
RBC InvestEase Fees
In this section of my RBC InvestEase review, I will discuss the expenses you can expect to bear if you are using this robo-advisor. RBC InvestEase has a flat 0.50% management fee for both its standard and responsible investing portfolios.
While both portfolios have the same base fee, the actual charges can differ due to the MERs of the underlying ETFs in your portfolio.
For Example: Let’s suppose David has a standard portfolio and the MER of the underlying ETFs in his portfolio is 0.26%. If he has invested a balance of $100,000 with RBC InvestEase, he can expect to pay a fee of 0.76% (0.50% + 0.26%). It translates to $760 per year in fees.
Another major expense you should know if you are using RBC InvestEase is the transfer fee. If you decide to move your account from RBC InvestEase to another financial product offered by another financial institution, RBC InvestEase will charge you $135 for the transfer.
That being said, RBC InvestEase does not charge any withdrawal fees, regardless of the type of account you have with the robo-advisor.
RBC InvestEase Performance
While I try my best to provide you a measure of the returns you can expect with robo-advisor products that I review on Wealth Awesome, I cannot provide you the same information for RBC InvestEase.
RBC InvestEase has not been around long enough to quantify and present you the historical returns on its various portfolios. If you start investing with RBC InvestEase, it will calculate your investment returns using a time-weighted return method that will consider the cash flow in and out of your account and the portfolio’s performance. You can see the returns you get on your RBC InvestEase dashboard.
Is RBC InvestEase Safe and Legit?
RBC InvestEase has to be one of the safest and most legitimate robo-advisors you can consider. RBC Direct Investing Inc. is the custodial broker for the robo-advisor. It holds all the funds you invest with RBC InvestEase.
RBC Direct Investing Inc. falls under the regulated institutions by the Investment Industry Regulatory Organization (IIROC), and it is a member of the Canadian Investor Protection Fund (CIPF). CIPF insures investor capital for up to $1,000,000.
Additionally, RBC InvestEase provides you a 100% online security guarantee. If you experience any losses due to unauthorized transactions made using your account, RBC InvestEase will cover all the losses.
RBC InvestEase Alternatives
When I was thinking about alternatives that I could talk about in my RBC InvestEase review, I could think of Wealthsimple, BMO Smartfolio, and Quest Wealth as the best options to consider.
RBC InvestEase vs. Wealthsimple
Wealthsimple is the most popular robo-advisor in Canada. It has been around for six years at writing, and it continues to perform well. Wealthsimple offers a tiered management fee of 0.50% per year for account balances between $1 and $100,000.
It reduces the fees to 0.40% for accounts with a more substantial balance. RBC InvestEase levies the flat rate of 0.50% regardless of your account balance. Wealthsimple also has a lower minimum account balance requirement of $1, compared to $100 for RBC InvestEase.
Wealthsimple also has zero transfer or withdrawal fees. RBC InvestEase charges a hefty $135 for transferring out of your account. If you want to know more about Wealthsimple, you can check out my Wealthsimple Review.
RBC InvestEase vs. BMO Smartfolio
BMO Smartfolio is the only other robo-advisor in the market offered by a Big Five Canadian bank. BMO Smartfolio is the first robo-advisor provided by a reputable financial institution, but it lacks in a few ways compared to RBC InvestEase.
RBC InvestEase has a lower fee due to its strategic partnership with iShares for a massive selection of ETFs for its portfolios. RBC InvestEase also offers a lower management fee of 0.50%.
The management fee for BMO Smartfolio can go as high as 0.70%. If you want to know more about BMO Smartfolio, you can check out my BMO Smartfolio Review.
RBC InvestEase vs. Questwealth
Questwealth is another significant product in the Canadian robo-advisor market. Brought to you by Questrade, the robo-advisor offers some of the lowest fees among its peers despite having actively managed portfolios.
Questrade also provides you with a team that works behind the scenes to manage your ETF portfolio. Questrade has a minimum account balance requirement of $1,000 – much higher than RBC InvestEase’s $100.
It also remains competitive with RBC InvestEase when it comes to management fees. If you want to find out more about Questwealth, you can check out my Questwealth Review.
|RBC InvestEase||Wealthsimple||Questwealth||BMO SmartFolio|
|Management Fees||0.50%||0.40%-0.50% per year||0.20%-0.25% per year||0.40%-0.70% per year|
|0.18%-0.30%||Around 0.2%||0.11%-0.23%||0.25% – 0.35%|
RBC InvestEase offers you the advantage of investing using a customized portfolio that consists of low-cost ETFs.
It offers you the opportunity to create a professionally managed portfolio with as little as $100. It also gives you the ease of mind that RBC itself backs the robo-advisor and offers you low fees for a portfolio of up to $100,000.
While it lacks a tiered pricing structure for higher account balances, RBC InvestEase offers responsible investing options. To round off my RBC InvestEase review, I give it a Wealth Awesome thumbs up. You can check out RBC InvestEase here.